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Ugandan shilling firmer, seen supported by mid-month tax payments
May 6, 2014 / 11:16 AM / in 4 years

Ugandan shilling firmer, seen supported by mid-month tax payments

KAMPALA, May 6 (Reuters) - The Ugandan shilling strengthened against the dollar on Tuesday and traders said it was likely to keep a firm tone in the days ahead due to mid-month tax payments.

By 0932 GMT, commercial banks quoted the currency of east Africa’s No. 3 economy at 2,517/2,527 per dollar, up from Monday’s close of 2,524/2,534.

“The market is not doing very well in terms of demand (for dollars) which has boosted the local currency,” said Bank of Africa trader Ahmed Kalule.

Kalule said the payment of corporate taxes, which fall due next week, could cause liquidity in the market to tighten, offering further support to the local currency, by making it a bit more expensive for banks to fund their dollar positions.

The local currency has been broadly stable against the greenback this year, but some analysts expect it to come under pressure in the medium term, mainly due to weaker economic growth prospects.

Earlier this month, the central bank cut its growth forecast for the 2013/14 fiscal year to 5.7 percent from a previous 6 percent.

Market participants attributed the lower forecast to the impact of a months-long conflict in neighbouring South Sudan, a major export market for Uganda.

“The implication of course is that the level of dollar inflows is below par and it will hit the shilling eventually,” one trader at a leading commercial bank said.

UGX Spot Rate.....

Ugandan Shilling Money Guide....

Calculated Cross Rates..........

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Uganda Equities Guide.......

Uganda All Share Index........

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Ugandan Debt Guide............

All Uganda Bonds.............

Uganda T-Bills..............

Uganda Benchmark.............

Central Bank ................

Ugandan Contributor Index....

Uganda Coffee Prices....... (Reporting by Elias Biryabarema; Editing by Duncan Miriri and Louise Ireland)

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